Amazon Faces Profit Pressure: Honeymoon Over? - InformationWeek

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Amazon Faces Profit Pressure: Honeymoon Over?
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Charlie Babcock
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Charlie Babcock,
User Rank: Author
4/28/2014 | 8:46:55 PM
Online retailing, on the ground delivery
Building out a decentralizewd, earth-bound material distribution system, versus building out online retail and cloud systems -- they represent different types of business management in the extreme. The distrubtion center, overnight delivery system and same day delivery in the big, green "Fresh" vans that I see on San Francisco streets, all of this has to be built up in a highly efficient manner by a company that's just gaining experience in the field. I don't know of another company that's trying to be both kinds of businesses. Amazon is trying to construct both for operation far into the future.
jagibbons
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jagibbons,
User Rank: Ninja
4/28/2014 | 8:43:33 PM
Re: Drones
Shareholder value can't be sustained over time if a company can't generate profit margin. Razor thin margins may seriously threaten Amazon's future.
Somedude8
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Somedude8,
User Rank: Ninja
4/28/2014 | 3:43:07 PM
Re: Those shareholder
Definitely have an eye on Dell, mostly out of curiousity. And a friend is one of their architects, so its interesting to hear some of the in-the-trenches stories as things both change and stay the same over there.
Lorna Garey
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Lorna Garey,
User Rank: Author
4/28/2014 | 3:39:50 PM
Re: Those shareholder
SomeDude, I'm with you. I don't think the overall model is the problem, necessarily, as much as the current expectation that companies will consistently deliver double-digit margins. I wonder how Dell is doing ...
Drew Conry-Murray
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Drew Conry-Murray,
User Rank: Ninja
4/28/2014 | 3:33:23 PM
Re: Drones
The purpose of a publicly traded company is to increase shareholder value. Personally I think $300 a share is a ridiculous price, but if I had bought it at $100 or even $200 a share, I'd be feeling just fine.
Thomas Claburn
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Thomas Claburn,
User Rank: Author
4/28/2014 | 3:14:31 PM
Re: Don't Expect A Profit
I'd love to know whether Amazon is making any money on Amazon Fresh? Their delivery trucks are all over San Francisco, blocking traffic all too often. But Amazon avoid the fate of WebVan when it comes to the delivery business?
Somedude8
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Somedude8,
User Rank: Ninja
4/28/2014 | 1:21:07 PM
Those shareholder
The more I see over the years, the more I can't escape this deep gut feeling that there is something fundamentally broken with the entire publicy traded company implementation, and maybe even the concept.

How many times have we seen shareholders, clamoring for profits, drive businesses to take actions counter to the actions that made them succssful in the first place? There is certain cycle that many companies seem to fall in to, that ultimately leads them a shareholder and spreadsheet jockey-driven demise.

Maybe I am just having a cynical morning.
RobPreston
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RobPreston,
User Rank: Author
4/28/2014 | 12:59:12 PM
Honeymoon
If Amazon's honeymoon is over, we should all be so lucky to have one that lasts so long. But people were saying its honeymoon was over after the dotcom bust of the early 2000s.
Gary_EL
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Gary_EL,
User Rank: Ninja
4/28/2014 | 12:39:49 PM
Drones
Ultimately, the purpose of any publicly traded company is to generate profits, which Amazon is not doing. The company's investors have been remarkably patient and tolerant. Maybe the silliness about drones was the straw that broke the camel's back.
Drew Conry-Murray
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Drew Conry-Murray,
User Rank: Ninja
4/28/2014 | 12:36:41 PM
Don't Expect A Profit
Amazon's whole business is based on razor-thin margins in everything it sells, so it's hard to see how you can expect much profit from a company like that. I think the real danger for Amazon is if it stops growing.
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